Saint-Gobain First-Half 2004 Results

Consolidated sales for the Saint-Gobain Group came to EUR15,696 million in the first half of 2004, representing an increase of 7.1% after a negative currency effect of 2.4%.

The contribution of the Group's acquisitions to the growth figure, net of disposals, amounted to EUR593 million during the period, accounting for a rise of 4.0% in net sales. Like- for-like growth amounted to 5.5% for the period as a whole, breaking down into 5.1% during the first quarter and 6.1% in the second.

Saint-Gobain Group consolidated net income for the first half of 2004 amounted to EUR487 million, an increase of 3.6% on the same period of 2003. Excluding capital gains and losses, net income came to EUR510 million, up 8.3%. This earnings growth was primarily fueled by an increase in operating income and a reduction in net interest and other financial charges.

Performance of Group sectors and divisions:
Apart from the Pipe Division, all of the Group's divisions reported sales growth in first-half 2004, with the majority picking up pace in the second quarter. On a like-for-like basis, second quarter sales were up 6.1% (of which 1.3% attributable to prices), on the back of a 5.1% increase in the first quarter. This gave a total growth figure for first-half 2004 of 7.8% for operating income (on a like-for-like basis) and 5.5% for sales (including a +4.8%volume effect and a +0.7% price impact). In line with the economic scenario anticipated at the beginning of 2004 and the trends of the first quarter of the year, the new businesses (Building Materials Distribution and High-Performance Materials), as well as emerging markets in general, proved to be the Group's main growth and profitability drivers.

This performance testifies to the quality of Saint-Gobain's business model and demonstrates the Group's ability to reap the benefits both of the current economic recovery -particularly in industrial production and capital spending - and of the growth in emerging countries.

The Glass Sector achieved satisfactory organic growth, with like-for-like sales up 4.0% and a slight increase in operating income. The Insulation and Containers divisions, spurred by sustained favorable market conditions, posted improved profitability. The Reinforcements Division was still affected by an overall contraction in sales prices throughout 2003, despite an upturn during the second quarter of 2004. Flat Glass continued on the growth track, reporting a 4.1% increase in like-for-like sales but margins were eroded due to downward pressure on sales prices in the European construction market during the first quarter of the year.

High-Performance Materials built on its first quarter performance and once again reported the Group's strongest like-for-like growth (9.0%), as well as a significant increase in operating margin to 11.1% from 9% in the first half of 2003. The recovery in the manufacturing industry and capital spending continued and picked-up pace during the second quarter of 2004. The Business Sector also continued to benefit from the cost cutting programs implemented over the past few years.

The Housing Products Sector also achieved very strong sales, reporting like-for-like growth of 6.1%. Operating income, however, rose by a more modest 3.0% on a like-for-like basis, due to the downturn reported by the Pipe Division which suffered from a significant increase in raw materials costs. The Building Materials Division - which is smaller in size since the sale of Terreal and Certain Teed Ventilation in 2003 - continued to benefit from the buoyant residential construction market in the United States. Meanwhile, the Building Materials Distribution Division pursued its expansion drive, both through organic growth (6.6% in first-half 2004) and acquisitions (including the consolidation of Dahl from May 1, 2004). Operating margin improved once again for the Division, rising to 4.9% from 4.6% in first-half 2003.

600450 Saint-Gobain First-Half 2004 Results

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